IBM earnings rise

Monday

Jul 18, 2011 at 7:00 PMJul 18, 2011 at 7:02 PM

By James Walsh

IBM Corp. raised its income guidance for the year on Monday as earnings in the latest quarter increased 8 percent because of growth in all three of its major product categories.The results show the strength of the 100-year-old company’s efforts to link its mainframes and other computing hardware with its newer businesses, software and services. IBM saw double-digit growth in both hardware and services during the second quarter. Business in emerging, or “growth,” markets was particularly encouraging, including gains in 16 African nations, said Mark Loughridge, chief financial officer.Net income was $3.66 billion, or $3 per share in the second quarter. A year ago it was $3.39 billion, or $2.61 per share.Revenue for the company’s System z mainframe is up 61 percent over last year, and Power Systems revenue is up 12 percent. IBM builds Power Systems and System z servers in Dutchess County.Loughridge said earnings per share were expected to be at least $13.35 for 2011. The company has $11.8 billion in cash and marketable securities on hand, and executed an $8 billion stock repurchase this year.“We’re exiting the second quarter with a lot going for us,” Loughridge said. “As IBM enters its second century, we have our eyes set on the long term.”Brian Marshall, an analyst with Gleacher & Co., said he was disappointed with the latest numbers. IBM’s income should have been higher, he said, considering that revenue was more than $1 billion higher than estimates.“They are spending faster than I thought – that is my main concern,” Marshall said, adding that IBM’s ability to hit its long-term profit target is “not a slam dunk in my view.”The Associated Press contributed to this report.jwalsh@th-record.com